International security concerns hurt travel and leisure stocks

Despite the economic shockwaves of last week’s events prompting an initial flight to safety, European stock markets have proved resilient, with Britain’s benchmark index advancing 1.45pc since Friday.

However, in early trade, the blue chip index tumbled into the red - down 0.4pc to 6,242.76, as tourism-related stocks weighed heavily on the index with investors fearing the appetite for holidays to the region would be reduced.

This morning French police targeted a building as they continued their hunt for Friday’s attackers, where heavy shooting and explosions were heard.

British Airways owner IAG became the biggest casualty, falling 2.8pc to 575p, while low cost carrier easyJet slipped 2pc to £16.76. The renewed uncertainty in the sector comes after two Air France flights travelling from the US to Paris made emergency landings after bomb threats were made.

InterContinental Hotels also fell 1.2pc to £24.70, while tour operator Thomas Cook edged 0.8pc lower. TUI AG bucked the trend, instead rising 0.5pc.

^{IAG four-day graph (Source: Bloomberg)}

Mike van Dulken, of Accendo Markets, said: "Further terror alerts have also muted overnight sentiment with the Germany-Netherlands football match in Hannover cancelled and two flights from the US to France being diverted after security alerts."

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Defence stock BAE Systems continued its upward trend as France intensified its military response to the attacks. Since beginning airstrikes in north-east Syria, it has been reported that 30 Islamic State militants have been killed.

Analysts at Berenberg said: “Security tensions have escalated sharply, and as western leaders begin to demonstrate a shift in posture we expect continued strengthening of sentiment for the defence sector, underpinned by a hardening of defence policies.”

The FTSE 100 stock rose 0.5pc to 476p.

Meanwhile, engine maker Rolls-Royce fell into negative territory for the first time since the attacks, after broker Investec slashed its target price.

Rami Myerson, of Investec, believes Rolls’ profit warning last week is unlikely to be its last, as he pointed to short and medium-term risk from a series of strategic, end market and accounting headwinds.

The stock was among the biggest casualties on the FTSE 100 - down 1.9pc at 544.5p.